Sequoia Breaks Convention, Invests in Anthropic Amidst VC Rivalry: FT

Sequoia Capital has reportedly made a notable move by investing in Anthropic, a prominent AI startup known for its Claude AI system. This development marks a significant shift in the venture capital landscape, as firms typically avoid funding competing companies within the same sector.

Sequoia’s Bold Investment Strategy

Sequoia’s decision to back Anthropic is particularly surprising given its existing investments in OpenAI and xAI, the AI venture founded by Elon Musk. Historically, prime investors like Sequoia have preferred to pick a single winner in rapidly evolving tech sectors.

Funding Round Highlights

The funding round for Anthropic is being led by Singapore’s GIC and U.S.-based Coatue, each contributing $1.5 billion. Overall, Anthropic aims to raise $25 billion, which would inflate its valuation to $350 billion, a considerable increase from its prior valuation of $170 billion just four months ago.

• Funding Contributors:
  • GIC (Singapore): $1.5 billion
  • Coatue (U.S.): $1.5 billion
  • Microsoft and Nvidia: Up to $15 billion combined
  • VCs and other investors: $10 billion or more
• Target Valuation: $350 billion
• Previous Valuation: $170 billion

Sam Altman and Sequoia’s History

Sam Altman, the CEO of OpenAI, has a long-standing relationship with Sequoia. The firm supported Altman when he left Stanford to start Loopt. Moreover, he has acted as a scout for Sequoia, facilitating investments in successful startups like Stripe.

Interestingly, Alfred Lin, Sequoia’s new co-leader, has shown strong support for Altman, declaring he would back Altman’s future ventures. This relationship deepens as Altman navigates a turbulent period at OpenAI.

Changes in Sequoia’s Approach

Sequoia’s shift in strategy becomes apparent when considering its past. In 2020, it made headlines by terminating its investment in Finix, a payments company, to avoid a conflict with Stripe, a key portfolio company. This move involved forfeiting a $21 million investment, a decision unprecedented in the firm’s history.

As Sequoia broadens its investment portfolio with Anthropic, it seems to signal a new approach in its funding strategy, potentially redefining traditional venture capitalist norms.

Future Prospects for Anthropic

Amid the substantial funding, Anthropic is reportedly preparing for an IPO, which could occur as early as this year. With backing from influential entities like Sequoia, Anthropic is positioned for significant growth in the competitive AI landscape.

Further statements from Sequoia Capital have not been disclosed, as the firm has yet to comment on this recent development.